A Cross-Border Battle: Singapore And Malaysia’s Healthcare Giants

Over the past decade, medical tourism in both Malaysia and Singapore have been growing. Today, both countries are home to some of the largest private healthcare providers in the region.

In here, let’s pit some of the largest healthcare companies that are listed in Singapore and Malaysia against each other to see which has the better business fundamentals.

An introduction

Interestingly, the largest healthcare company in Singapore and Malaysia’s stock markets are the same company: IHH Healthcare Bhd (SGX: Q0F). The firm, which is dual-listed in both Singapore and Malaysia, is also one of the largest hospital operators in the world, with hospitals in Asia, Europe, the Middle East, and even Africa.

The RM53.5 billion (S$18.5 billion) IHH Healthcare counts the Malaysian and Kuwaiti governments as two of its major shareholders.

Going up against this giant, we have Raffles Medical Group Ltd (SGX: R01) as the representative from Singapore and KPJ Healthcare Bhd (KLSE:5878.KL) from Malaysia’s corner.

Raffles Medical’s main market is currently Singapore, in which it runs its flagship asset, Raffles Hospital, a private tertiary hospital. The company also has more than 100 medical centres under its wing in a number of different Asian countries including Singapore, China, Japan, Vietnam, and Cambodia. Meanwhile, KPJ Healthcare has a portfolio of 29 hospitals at the moment across Asia, with the bulk of them being in Malaysia.

Revenue and profit

Here’s how the three companies’ revenues and profits in 2014 look like:

IHH Healthcare, Raffles Medical, KPJ Healthcare revenue and profit
Source: S&P Global Market Intelligence

As you can tell, in terms of size, IHH Healthcare is in a league of its own when compared to the other two healthcare companies.


But when it comes to profitability, size might not be that important. Even though IHH Healthcare is much larger, it was only able to achieve a return on asset of just 3% in 2014. Given that the company does not employ much leverage, its return on equity is also similar at just 4.6% for the year.

KPJ Healthcare was able to record a slightly better return on asset of 3.9% in 2014. But, as it had employed more debt, its return on equity had been more impressive at 11.7%. That being said, getting a high return on equity via the use of large amounts of debt might not be the most prudent thing to do for a company.

This is one area in which Raffles Medical comes out tops. In 2014, the Singapore-based healthcare provider had produced a return on asset and return on equity of 7.9% and 13.4%, respectively. These are much higher than what IHH Healthcare and KPJ Healthcare have.


With the strong demand for healthcare services and the defensive nature of healthcare businesses, valuations for healthcare companies tend to be higher than the market average.

This fits all three companies I’m looking at. At its current share price of RM4.31, KPJ Healthcare trades at 28 times trailing earnings. Meanwhile, Raffles Medical also has a similar valuation – it has a trailing price-to-earnings (PE) ratio of 34 at its share price of S$4.11 at the moment.

If the PEs of around 30 that KPJ Healthcare and Raffles Medical have are making you uncomfortable as an investor, then get ready for IHH Healthcare: The giant healthcare provider has a PE ratio of 72 at its current share price of RM6.47.

Foolish Summary

To sum it up, each of the three companies we’ve looked at have their strong points. IHH Healthcare has the advantage of size, Raffles Medical has strong profitability, while KPJ Healthcare is the one with the lower valuation.

But, do note that none of the above is meant to be taken as the definitive word on the investing merits of the three firms; a deeper study is required before any investing decision can be reached.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares in any companies mentioned above.